Organisational Design and Culture

Aim

The aim of this chapter is to:

Explain the concept of organisational design

State aspects of organisational design

Highlight the concept of organisational structure and organisational culture

Objectives

The objectives of this chapter are to:

Explain the dimensions, determinants, and elements of organisational design

Enlist factors influencing organisational redesign

State characteristics of organisational culture

Highlight the importance of organisational design, structure and culture

Learning outcome

At the end of this chapter, the students will be able to:

Understand various types of organisational design

Enumerate dimensions, determinants, and elements of organisational design

Identify the basis of assessing organisational culture

3.1 Introduction

Organisations develop from small to large units by moving through four stages of a life cycle: birth stage, youth stage, middle stage, and maturity stage. This process of development is accompanied by corresponding changes in the organizational design.

Birth Stage: This is the stage when the organization is created. At this initial stage, the organization’s decision making is highly centralized. The organization is informal. There are usually few rules and regulations, no professional staff and no internal system for planning.

Youth Stage: During this stage, additional employees are employed as the sales for the company’s products and services increase. Although authority is fairly centralized, a few trusted employees are involved in decision making process. Some informal rules and procedures are involved. There are now a few professionals and administrative personnel in the organization. The division of labor begins to occur as the newly formed departments are assigned tasks.

Middle Stage: By the time the organization reaches this stage, it has become somewhat successful and grown in size. Its structure is similar to that of a formal bureaucracy with formalized departments, supporting staff departments and many professional and clerical staffs. A large set of rules and procedures have been introduced. Authority has been effectively decentralized. The division of labor has become extensive.

Maturity Stage: During this stage the organization becomes very large and mechanistic. A set of bureaucratic rules, regulations and policies prevail. Decision making is centralized. The division of labor is highly refined. As a result of the rigid virtual hierarchy, the organization is on the brink of stagnation. At this stage, the organization attempts to become innovative and flexible. As such, it decentralizes authority within the lateral structures such as liaison personnel, task forces, and project teams. Thus, it is clear that an organization’s structural characteristics undergo different stages of organization’s life cycle.

3.2 Organisational Design

Organisational designing is very important in shaping the organizational behavior and organization culture.

3.2.1 Definition:

Stephen Robbins: A process of determining as to how tasks are divided , grouped and coordinated for the successful achievement of the organizational goals.

It is extremely difficult to design and redesign the organization structure, with an old organization. However, modern organizations review the design once every 5 years to cope with changing situations.

3.2.2 Dimensions of Organisational Design

The vertical dimension relating to the hierarchy of the managerial levels of superiors and subordinates•

The horizontal dimension relating to decentralization, divisionalisation, departmentalisation, sectionalisation

3.2.3 Determinants of Organisational Design

Ownership (public, private, joint, co-operative)

Size (small medium, large etc.)

Technology (old, new, automation, modernization)

Strategy (goals, objectives, evaluation of alternatives)

Environment (internal, external)

3.2.4 Elements of Organisational Design

Work Specialization: Division of labor based on work specialization helps to improve the efficiency and effectiveness of the organization.

Departmentalization: It is a process of dividing the various activities into different departments for proper administration of the organization.

Advantages of Departmentalization:

It permits utilization of expertise of people•

It creates a feeling of autonomy and job satisfaction among employees

It helps fixing the authority- responsibility relationship of the managers

It facilitates performance appraisals by managers

It helps the training, development and job rotations of managers

Chain of Command: Organisational communication requires a chain of commands to flow downwards/upwards/lateral. Organisational behavior becomes more complex in the absence of a proper chain of commands.

Span of Control: It is the number of subordinates that can be efficiently managed by the superior for the optimum performance of the work team.

3.3 Centralization v/s Decentralization

Centralization: It is a systematic and consistent reservation of authority and decision making at a central point in the organization.

Centralized authority and decision-making policy work well for a small organization. For a growing large scale organization activities should be decentralized to cope with changing demands for efficiency.

Decentralization: It is a process of dividing organizational activities into different autonomous divisions, physically and functionally.

3.3.1 Factors Influencing Organisational Redesign

There are certain aspects wherein an organization has to change in

Knowledge requirements

Technology and skill requirement

Knowledge of human behavior

Emphasis from command control to consensus self control

Also an organization has to change from

Centralized to decentralized structures

Vertical and tall to horizontal and flat organizations

Instability to mechanistic systems

Generalization to specialization

Product orientation to function orientation

Mechanistic approach to humanistic approach.

3.4 Organisational Structure

An organization can be depicted by a line diagram, which is called as organization chart. The organization chart shows the organizational structure. It shows various positions of the people, their status etc.

3.5 Organisational Culture

Organisational culture is an abstract concept that varies from one organization to other. It helps in organizational image building, goodwill and reputation.

3.5.1 Definitions:

Edgar Schiene: As the sum total of the knowledge, beliefs, values, perceptions, attitudes, traditions, customs that are shared by the groups and resulting into individual and group behavior of the people working in the organization over a period of time.

Schneider and Snyder: As a process of manifestation of the perceptions, values and attitudes of the members of the organization.

3.5.2 Indicators of Organisational Culture:

More Bureaucratic Culture: Lack of knowledge

0 Lack of skills

0 Negative attitudes

0 Resentful service

0 Lack of compatibility

0 Red tapism

0 Bureaucracy

0 Lack of discipline

0 Lack of cleanliness

0 Poor quality and quantity of organizational culture

Less Bureaucratic Culture: Adequate knowledge

0 Adequate skills

0 Positive attitudes

0  Cheerful service

0  Accountability

0  Responsibility

0  Better discipline

0  Better cleanliness

0  Efficiency and effectiveness

0  Better quality and quantity.

3.5.3 Projection of Organisational Culture

According to Edgar Schiene, organizational culture is projected at three levels

Level1: Logo, trade mark, dress code, values etc

Level2: Shared values and beliefs among employees

Level3: Common assumptions of the management about the employees

3.5.4 Characteristics of Organisational Culture

Pragmatic policies

Strategic planning

Decentralization and delegation

Individual autonomy

Participation in decision making

Risk tolerance

Integration with the organizational goals

Management support

Innovation and creativity

Self- esteem and identity

Control systems

Communication systems

Conflict management

Reward system

3.5.5 Factors Affecting Organisational Culture

Organisational context

Organisational structure

Organisational processes

Physical environment

Values, norms, systems

3.5.6 Assessing Organisational Culture

According to Rensis Likert, organisational culture can be assessed on the basis of the following 7-point scale.

Leadership style

Morale and motivation

Organisational communication

Interaction- influence process

Decision making

Goal setting

Control

3.5.7 Changing Organisational Culture

Some factors that can bring about a change in organisational culture:

Treat employees as individuals

Respect individual identity and self-esteem

Improve organizational communication

Give training and development inputs at all levels

Review systems and procedures

Improve leadership and team building

Give rewards and incentives in due recognition and appreciation

Delegate to improve autonomy

Change from autocratic to participative style of management

Develop a positive attitude towards the organizational goals

Summary:

    This chapter covers definitions, dimensions, determinants and elements of organizational design

     It also includes organizational structure, organizational culture and its aspects

      Every organization has a culture which is different from its structure. The structure can be seen on paper, but  culture can only be experienced

      There are several factors working at several levels which project the culture of an organization, which need to be analyzed for better efficiency of an organization

References

      Indira Gandhi National Open University (IGNOU) eGyanKosh. Block-2 Organisational Design. Available at:  <http://www.egyankosh.ac.in/bitstream/123456789/646/1/Unit-4.pdf> [Accessed 6 October 2010].

Recommended Reading

      Gareth R. Jones, 2009.  Organisational Theory, Design, and Change. Publisher: Prentice Hall, 6th edition.

       Richard L. Daft, 2009.  Organisation Theory and Design, South-Western College Pub; 10th editions.

       Richard M. Burton, 2006.  Organisational Design: A Step-by-Step Approach, Cambridge University  Press.

       Taylor Cox, 1993. Cultural Diversity in  Organisations: Theory, Research, and Practice. Berrett-Koehler  Publishers, 1st edition.

       The Modern Firm: Organisational Design for Performance and Growth [Paperback]. By John              Roberts.    

       Publisher:  Oxford University Press, USA (October11, 2007)